۱- Introduction

۲- Literature review

۳- Methodology

۴- Discussion

۵- Conclusion

References

Abstract

This paper examines the effects of organizational culture and national cultural distance between the headquarters and the subsidiary on the adaptation of management innovations in multinational enterprises (MNEs). Data on Total Quality Management (TQM) implementations were collected from a sample of 126 MNEs operating in Saudi Arabia and analyzed using fuzzy-set qualitative comparative analysis (fs-QCA). The findings highlight the critical roles that national and organizational cultures jointly play in the adaptation of a management innovation. The results suggest that different configurations of organizational culture and national cultural distance result in different levels of fidelity and extensiveness of the implementation when management innovations are transferred from MNE headquarters to subsidiaries. More specifically, our findings show that a greater level of national cultural distance is not necessarily a barrier to the transfer of a management innovation within an MNE and that the organizational culture can offset the effect of national cultural distance.

Introduction

Management innovation has been argued to be one of the most important and sustainable sources of competitive advantage for firms (Hamel, 2006) and is an increasingly important issue for firms as they seek to improve their productivity and competitiveness in the face of global competition. Following Mol and Birkinshaw (,p.)1269, 2009, we define management innovation as “the introduction of management practices that are new to the firm and intended to enhance firm performance”. Most previous studies have focused on various aspects of adoption of management innovations (e.g. Abrahamson, 1991); and consider successful transfer to have taken place when the practice is adopted. However, Rogers (2003) suggests that new technology or management innovations are not usually adopted in their original form by organizations but altered or “adapted” by organizations in the transfer process. In other words, they are likely to be both adapted and adopted. Ansari, Fiss, and Zajac (2010, p.71) define the adaptation of management innovations as “the process by which an adopter strives to create a better fit between an external practice and adopter’s particular needs to increase its ‘zone of acceptance’ during implementation”. In this paper, we examine how organizational culture, as well as national cultural distance between the headquarters and the subsidiary, affect both the adoption and the adaptation of management innovations transferred within MNEs. In the innovation diffusion literature, it has been argued that the adaptation of management innovations in MNEs is affected by two cultural factors. On the one hand, the international management literature has reported extensively on the effects of national cultural distance on the adaptation of management innovations, with a focus on the adaptation practices of MNEs in cross-national contexts (Ansari, Reinecke, & Spaan, 2014; Canato, Ravasi, & Phillips, 2013; Fiss, Kennedy, & Davis, 2012; Kostova, 1999). On the other hand, previous management scholars (e.g. Ansari et al., 2010; Canato et al., 2013; Zu, Robbins, & Fredendall, 2009) have stressed the important role of organizational culture, in particular, the fit between an organizational culture and a business practice in the transfer of the business practice. These studies have found direct relationships between some dimensions of organizational culture, such as commonly held values, beliefs and attitudes, work practices and behaviors on the one hand, and the implementation and the adaptation of management practices on the other (Zu et al., 2009). Although the importance of these cultural factors at the organizational and national levels in the adaptation of management innovations has long been accepted in the literature, surprisingly their joint effects on the adaptation of management practices have rarely been studied in an MNE context.